SIDNEY VILLAGE BOARD OF TRUSTEES PUBLIC MEETING FEBRUARY 13, 2019

            The Sidney Village Board held a public meeting on February 13, 2019, at the Sidney Fire Department for the purpose of explaining the possible sale of the municipal water system.  Present were Supervisor Bennett, Attorney Miller, Engineer Friend, Clerk Moore, President Finn, and Trustees Arrasmith, Catron, McCloud, Schluter, Roberts, and Bickers.
 
            Attorney Miller opened the meeting with a presentation about the water system, and handouts were passed out to the 17 residents in attendance.
 
            The water system was created in the 1940s, which includes the water tower, the stations, and many of the mains.  The water system is breaking even, covering costs of water, repairs, salaries, and engineering costs.  To make major upgrades the Village will either have to borrow money or sell the system.  In 2017 engineers recommended work in four areas:  water tower, vaults, water mains, and a new meter reading system.  It will cost $1,000.000 to fix all areas.  Another consultant hired to assess the situation came to the same conclusion. 
 
            The Village had a major increase in the water rates in the fall to have money to start these improvements.  To be able to make all these improvements, the Village will have to borrow money, but they are in a good position to so so because they do not owe any money now, and the interest rate would be in the 3% range.
 
            The State of Illinois passed a statute to help out small water systems by awarding water companies that buy small town water systems in trouble.  A large company can spread its costs out over all its customers it serves.  Also, it is able to buy in bulk so that a fire hydrant that costs the village $2,500-3,000 can be bought by a big company for $700.  The same with piping.  They buy in bulk and then store the material in warehouses until needed. The Village Board has put out a Request for Proposals for the sale of the water system, and those proposals are due the end of February.  The Village can the negotiate the details of the contract, such as requiring that something be fixed by a date.  The Board voted to do this at an open meeting.  The Village is testing the waters by RFPs to see if a sale would be advantageous to us.
 
            One of the questions frequently asked is:  what will this do to my water bill?  Pricing from last fall for 4,200 gallons of usage:  Sidney, $69.40; Aqua, $56.54; Illinois American, $49.07.                         
           
            There followed a time for questions.
 

1. If the Village borrowed money, would this affect our rates?

A.  No, the raise last fall would take care of the payments.  The study is on the Village web site, and it tells how the Village will service the debt.  Rates will probably go up 3% a year for inflation no matter who owns the system.
 

1. If it is sold, will we share other towns' expenditures for upgrades?  Champaign is getting new subdivisions all the time.

A.  Yes, but the systems the companies own are in good shape so they will not require the upgrades that the ones being bought will have to have.  Also, companies have routine replacement and maintenance.  They have more resources and do not have to delay maintenance.  To raise their rates, they have to go to the Illinois Commerce Commission for approval and the Commission will compare their costs with their income.
 

1. In Champaign-Urbana, the developer pays for the water and sewer costs for the development.

 

1. Is the Village breaking even or not on the water?  It looks as if we will pay a 3% increase no matter if we sell or don't.

A.  The Village was subsidizing the system for many years.  Recent increases got the system up to breaking even and, with the latest increase, accumulating some but not enough to maintain without borrowing. There will be ongoing rate increases either way.    The water tower was built in 1940.  The wood was replaced with metal in 1967, but the legs are the same ones installed in 1940.  This is all in the report.
 

1. After paying off the loan in 20 years, what will be next, more expenses?

A.  The system will be in pretty good shape except that the water tower will have to be repainted about every 25 years and that is very expensive. The last bid to do this was $400,000.  The Village would probably have to take out another loan.
 

1. What about the vaults?

A.  The meter vault outside Urbana was installed in 1991 and it is now rusted clear through the bottom and has to be replaced.
 

1. This sounds like a unique opportunity.  How many towns are selling?

A.  The State act puts towns wanting or needing to sell their systems in a beneficial position.  The companies are guaranteed an 8% return.
 

1. If we didn't sell now, would we have an opportunity to do in the future?

A.  Hard to predict.  The financial incentives to buy bad systems are right now.
 

1. We are band-aiding the system now.  What happens in a catastrophic situation?

A.  Let's say the tower was damaged.  You would have to bring in tanks and pay prime dollars to contractors to install.  This would be a gigantic expense.  The Village could provide water but its use would probably be restricted.  You can wait too long to fix a system or a component.  The water tower has to have something done.
 

1. How much water does the Village use?

A.  2.7 million gallons a month
 

1. The rate for out-of-town, will that change?  Will the water tower be moved?  How often would we be billed? 

A.  The company that buys the system will decided the rates.  It is possible to move the water tower but not probable.  The company will be buying the property where the tower sits.  Probably still be billed once a month
 

1. If we sold, how would that affect having a sewer system?

A.  We have a turn-key plan.  We asked if we could sell those plans but the ICC doesn't recognize those plans.  A sewer system is completely separate from the water system.
 

1. Will the company take care of the needed projects.

A.  Absolutely.  All that is put into the contract., and they would be obligated to do so.  In turn, the company will do its own in-house assessment.  All projects will be done by contractors, not in-house.
 

1. Looking into the process, what do you think will happen?

A.  It all depends on the bids.  If we do not sell, we will continue to borrow to fix the system on our own.
 

1. What will the Village do with the money from the sale?

A.  There are different options:  new community building, upgrading the parks, streets, etc. Fisher used its sale money to pay off its debt (Sidney has none) and is still studying what to do with the rest.  Sadorus made $240,00 on its sale and hasn't spent the money yet.  All small towns are taking their time with spending the money.
 

1. Is there a certain amount of time that a repair would be made, for example, a major water leak?

A.  No guarantees.  The ICC formula rewards companies for fixing problems on a timely basis.  Also, the company is losing money when water is being used that they don't make money on.
 

1. The water mains are in front of the downtown businesses.  If they have to fix a main, how would the company repair the street?  How about private homes?

A. Sidney's ordinance states that the driveway is replaced with rock.  The companies' policy is that they replace what they took out.  As far as moving the downtown mains, the company will assess whether to move them or not.
 

1. How will the salaries of the employees who do water work now be paid?

A.  If the company wants to or if we put that in the contract, the company would pay to the Village, a percentage of the salary that is dedicated to water work.
 

1. Is the audit report on the web page complete?

A.  Yes
 

1. What would a sewer system cost?

A.  $10,000,000 when we did the study.  There are more regulations now.  The map will never need updating except for new construction or changes like that.  The other half of the study was for a treatment plant, and the new regulations (nutrient control) mean it would need to be updated.